Wednesday, January 13, 2010

“Personal loans up as banks ride wave (Sydney Morning Herald)” plus 3 more

“Personal loans up as banks ride wave (Sydney Morning Herald)” plus 3 more

Personal loans up as banks ride wave (Sydney Morning Herald)

Posted: 13 Jan 2010 05:20 AM PST

Personal loans are making a comeback, and banks are getting the cream.

The latest lending figures show fixed-term borrowing for cars, boats and travel has jumped 38 per cent since its low point in November 2008 at the depth of the financial crisis.

Banks have captured all of the growth, boosting personal lending by 57 per cent in the year to November at the expense of non-bank institutions, whose lending dropped 13 per cent.

Loans for new cars jumped 8 per cent, loans for boats 19 per cent, and unsecured loans for blocks of land 50 per cent.

''The improvement in economic conditions, and in particular the sustained improvement in consumer confidence, is starting to resonate,'' said a CommSec economist, Savanth Sebastian.

''Job security is giving consumers more confidence to go ahead with planned purchases of big-ticket items like motor vehicles.''

The figures show a move away from borrowing to buy used cars. Loans for second-hand vehicles were down to the lowest point in the 22 years records have been kept.

Australians also seem to be shying away from credit cards. The 38 per cent growth in fixed loans has outstripped a 6 per cent growth in credit card and personal revolving credit limits.

Other figures released yesterday show mobile phone purchases accelerating, with December being the second-biggest month for sales on record.

The Australian Mobile Telecommunications Association said a near-record 9.1 million mobile phones were imported last year, more than in any year other than 2007.

The 17 million mobile phones imported over the last two years amount to one for each Australian over the age of 15.

''The data on mobile phone sales is confirmation that consumer spending is recovering,'' said Mr Sebastian. ''Aussie shoppers are still cautious, largely waiting for discounting to buy goods, but that is to be expected given the shock of the financial crisis and expectations of further rate hikes.''

The Bureau of Statistics lending figures show the trend in commercial lending continuing to deteriorate despite a 4 per cent jump in November. The trend is down 8 per cent over the year.

Mortgages for housing fell 3 per cent in November and lending for renovations fell 2 per cent after mortgage rates began climbing in October.

The figures were published a day after ABS data showing a 6 per cent fall in home loans taken out in November.

Mr Sebastian said the locomotive of lending had switched from mortgages to personal loans.

''It is ironic that over the past year what supported lending finance was housing, which has now contracted largely due to the fact that we've had rate hikes and the expiry of the First Home Owners Boost,'' he said.

''The boost brought forward purchases by six months or so and we're seeing the natural lull now.''

The Reserve Bank board will meet in three weeks to decide whether to increase rates again for what would be the forth consecutive time.

A further rise of 0.25 percentage points would add another $47 a month to the cost of servicing a $300,000 mortgage, on top of the $135 to $185 added since October.

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Banks enjoy rise in personal loans (The Age)

Posted: 13 Jan 2010 05:27 AM PST

PERSONAL loans are making a comeback, but it's the banks that are getting the cream.

The latest lending figures show fixed-term borrowing for purposes such as cars, boats and travel has jumped 38 per cent since its low point in November 2008 at the depth of the financial crisis.

All of the growth has been captured by the banks, which boosted personal lending an extraordinary 57 per cent in the year to November at the expense of non-bank institutions whose lending dropped 13 per cent.

Lending to buy new cars jumped 8 per cent, lending to buy boats 19 per cent, and unsecured lending to buy blocks of land rose 50 per cent.

"The improvement in economic conditions and, in particular, the sustained improvement in consumer confidence is starting to resonate," said CommSec economist Savanth Sebastian.

"Job security is giving consumers more confidence to go ahead with planned purchases of big-ticket items like motor vehicles."

The figures show a move away from borrowing to buy used cars, with loans to buy second-hand cars and wagons down to its lowest point in the 22 years records have been kept.

Australians also seem to be shying away from credit cards with the 38 per cent growth in fixed loans far outstripping a 6 per cent growth in credit card and personal revolving credit limits.

Other figures released yesterday show our desire to buy mobile phones accelerating, with December the second-biggest on record. The Australian Mobile Telecommunications Association said a near record 9.1 million mobile phones were imported in 2009, more than any year other than 2007.

The 17 million mobile phones imported over the past two years amount to one for each Australian over the age of 15.

"The data on mobile phone sales is confirmation that consumer spending is recovering," Mr Sebastian said.

"Aussie shoppers are still cautious, largely waiting for discounting to buy the goods they need, but that is to be expected given the shock of the US financial crisis and expectations of further rate hikes."

The Bureau of Statistics' lending figures show the trend in commercial lending continuing to deteriorate despite a 4 per cent jump in November.

The trend is down 8 per cent over the year. Mortgages for housing fell 3 per cent in November and lending for renovations dropped 2 per cent after mortgage rates began climbing in October.

The figures were published a day after ABS data showing a 6 per cent fall in in the number of home loans taken out in November.

Mr Sebastian said the locomotive of lending had switched from mortgages to personal loans.

"It is ironic that over the past year what supported lending finance was housing, which has now contracted largely due to the fact that we've had rate hikes and the expiry of the first home owners boost," he said.

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U.S. probing 15 FHA lenders on failed loans (Washington Post)

Posted: 12 Jan 2010 09:00 PM PST

Agents and auditors served subpoenas to the lenders demanding documents related to the failed loans to determine whether there was any wrongdoing, said Kenneth Donohue, inspector general of the Department of Housing and Urban Development, which includes the FHA.

Each firm raised suspicion because its default rate was at least twice the average of peers in their area. Together, they originated about 100,000 FHA-backed loans in the two-year period ended Nov. 30 and the FHA paid claims on roughly 12,000 of them, according to a federal database. The agency does not make loans; it insures the lenders against default.

The largest contributor to the volume of bad loans was the Memphis-based bank First Tennessee, which sold its mortgage division to MetLife in 2008 and has since focused its mortgage lending in Tennessee. The bank said in a statement Tuesday that just a few bad loans in the smaller pool of loans originated since then could have hurt its performance.

The only Washington area lender served with a subpoena was Dell Franklin Financial of Millersville in Anne Arundel County. Richard Reese, the company's president, said he is confident that fraud is not at the root of the troubled loans at his firm.

"Many loans we do are in underserved areas that were hit by the poor economy," Reese said. "We have done nothing wrong."

The inspector general's probe is the latest push by the federal government to weed out fraudulent lenders who may be using the same abusive tactics that contributed to the collapse of the subprime market in order to chase after the growing volume of borrowers who are taking out low-down-payment FHA loans.

The agency has recently taken actions that have forced two high-profile lenders -- Taylor, Bean & Whitaker and Lend America -- to shut their doors.

On Tuesday, Donohue and FHA Commissioner David H. Stevens said they are not making accusations against the firms they are scrutinizing. The subpoenas are a "targeted effort to look inside the operations and loan files of a select group of outliers" to figure out what happened, Stevens said.

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Personal Finance Daily: A lot is riding on the soundness of the FHA (Market Watch)

Posted: 13 Jan 2010 10:40 AM PST

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By MarketWatch

Don't miss these top stories:

At the height of the housing boom the Federal Housing Administration was nearly invisible. The Depression-era agency that along with the Veterans Administration allowed millions of Americans to become homeowners in the post-World War II years didn't even have 3% of the mortgage market.

That's not surprising, given that the FHA's mission -- to provide federally backed mortgage insurance for low-down-payment loans to low- and moderate-income Americans -- was rendered moot by a private mortgage industry that ran amok making loans to anyone with a pulse, down payment or not. Now, with the market bust, the tide has turned: The FHA is once again a bulwark of the mortgage business.

But that doesn't mean that all is right in FHA land. Critics worry about the quality of its recent loans and the system's susceptibility to fraud. Although the agency says it is fiscally sound and its reserves are adequate to withstand an expected foreclosure wave, it's taking steps to shore up its underwriting and this week said it was investigating lenders who have made a high percentage of bad loans.

The FHA has played a major role in stabilizing the housing market during this financial crisis. If it goes sour too, we'll end up right back at the bottom we have just clawed our way off of.

-- Steve Kerch, assistant managing editor/personal finance

REAL ESTATE

Fifteen mortgage companies subpoenaed by HUD

The Department of Housing and Urban Development said Tuesday it's taking a closer look at 15 mortgage companies to determine why they had such high rates of problems with FHA-insured mortgages.
See Mortgages.

Bonuses fuel apartment sales

Brokers say Web and open-house traffic is up for luxury apartments. Dawn Wotapka tells the News Hub's Simon Constable it's tied to Wall Street bonuses.
Watch Video Report.

Challenging Bernanke on housing bust

Federal Reserve Chairman Ben Bernanke says low interest rates aren't to blame for the housing boom and bust. Jon Hilsenrath tells Kelly Evans why fellow economists aren't buying his argument.
Watch Video Report.

Weekly mortgage applications rise 14.3%: MBA

Mortgage applications rose a seasonally adjusted 14.3% last week as interest rates on fixed-rate mortgages fell, the Mortgage Bankers Association said Wednesday. Refinancing applications jumped 21.8% in the week ended Jan. 8 compared with the week before, which was shortened for the New Year's holiday. Applications for mortgages to purchase homes rose a seasonally adjusted 0.8% on a week-to-week basis.
See Economic Report.

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